Premier Foods said today that its annual profits would surpass market expectations after households splurged on its cakes, sauces and other sweet treats over the Christmas period.
The company’s share price climbed more than 6% in early trading after it forecast a trading profit of at least £145m for the year to April, ahead of analysts’ average estimate of £140.7m.
This followed robust sales across its top brands during its third quarter to 1 January, with its Mr Kipling cake range delivering its best-ever Christmas performance.
Premier’s total sales fell 1.8% from a year earlier when tight Covid restrictions and the closure of the hospitality sector meant people ate more at home. However, they were 7% above pre-pandemic levels in 2019.
In its Grocery division, year-on-year sales were down 3.3%, but many of its brands grew in double-digit terms versus two years ago and drove branded revenue up by 11.2%. Brands such as Bisto, Sharwood’s, and Nissin noodles were said to have benefitted most from strong demand during the period.
Meanwhile, branded sales in its Sweet Treats division rose 6.3% on a year-on-year basis and by 11.6% compared to two years ago, helped by an increased number of family gatherings over the festive period. The performance of Mr Kipling was driven by increased sales across all its core cake ranges and also healthier products such as reduced sugar Angel Slices. Cadbury cake grew sales across its range of existing and new product ranges, the latter driven by Fudge and Crunchie cake bars.
The company confirmed today that it was ramping up its expansion into international markets after 33% growth compared to two years ago. Following trials in Canada, the first shipments of Mr Kipling cakes are due to enter stores in the US during the fourth quarter.
Analysts at Jefferies said: “The principal takeaway for us is that Premier Foods have maintained good underlying sales momentum, in a year of tough comps and have protected margins, in a year of high-cost inflation.”
